Government Details Fraud Claims Against ArmenTel

YEREVAN (RFE/RL)–The Hellenic Telecommunications Organization (OTE) has invested in Armenia less than half of what it claims–according to an Armenian government report leaked to RFE/RL over the weekend.

The report drawn up by an inter-ministerial commission accuses OTE’s Armenian subsidiary–ArmenTel–of large-scale financial fraud and is likely to lead to further deterioration of the government’s relations with the telecom monopoly. The commission is demanding a criminal inquiry into its findings and is recommending the government to seek an international third-party audit of ArmenTel.

The 60-page report was presented to a group of lawmakers on Friday at a meeting held behind the closed doors. It will be officially publicized after a response from ArmenTel.

The company said on Monday it is now looking into the allegations. An OTE spokesman in Athens–George Relis–also declined to comment on the conclusions drawn by the commission–but stressed that the Greek telecom giant has honored all investment commitmen’s stemming from its 1998 purchase of ArmenTel.

OTE claims to have invested $127 million in Armenia by March 2001–more than the $100 million minimum set under the terms of the deal.

However–the government commission has painted a different picture–putting the investment total at only $52.5 million. The report says the Greeks have inflated the figure mainly by importing "artificially expensive equipment." It also accuses them of an "arbitrary selection" of suppliers.

The commission headed by Transport and Communications Minister Andranik Manukian–claims that most tenders held by ArmenTel were unfair and non-transparent. On one such occasion in 1999–the report says–ArmenTel rejected more lucrative offers from leading telecom giants like Alcatel–Lucent and Siemens to grant contracts to two Greek firms on far less favorable terms. According to it–ArmenTel’s then chief executive–Iannis Lambrionis–and financial director received $15,000 each as a reward for what their parent company found to be a successful deal.

"ArmenTel–acting at the behest of OTE–has placed supply orders with mainly Greek companies–especially the ones in which OTE itself holds stakes," the report says.

The commission also blames the ArmenTel management for the telecom operator’s falling revenues accompanied by mounting expenditures–implying that it is now less efficient than it was before its takeover by OTE.

Meanwhile–the owner of a Greek company that has been a key equipment supplier of the OTE telephone company and its ArmenTel subsidiary was charged on Tuesday with fraud–money laundering and espionage–reports from Athens said.

The Associated Press reported that the case against Socrates Kokkalis–one of Greece’s richest men–was brought by a Greek public prosecutor. The fraud charge relates to activities of the tycoon’s Intracom company.

OTE’s and ArmenTel’s dealings with Intracom figure prominently in the fraud allegations made against the national telecom operator by the Armenian government. A government report leaked to RFE/RL at the weekend accuses OTE of giving Intracom and other Greek firms privileged treatment in the selection of contractors for ArmenTel. The report claims that the state-controlled Greek giant deliberately inflated the already high cost of Intracom equipment imported to Armenia.

Intracom has won at least $38 million worth of contracts in Armenia over the past four years–ArmenTel records show.

The fraud charge against its owner and founder reportedly stems from his alleged involvement with Russia–where Intracom has supplied lotto machines–software and technology. Kokkalis–63–is also being accused of allegedly spying against Greece for the Stasi–the East German’secret service that was disbanded in 1990. Intracom said they have no comment on the charges–according to the AP.

Kokkalis was educated in Moscow and East Berlin before returning to Greece to set up Intracom–which supplied OTE with equipment.


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